Final Salary Pension -take as is, or look for alternative financial product?

LHW99

And some DB pensions cannot be transferred because they are "unfunded public sector"......

Marcon

cloud_dog wrote: »

I know you said you are in the dark about pensions but....You are completely missing the point.

Not really. OP has asked for a link which sets out the sort of options which might be possible - not whether they are 'suitable'. My link above does just that.

cloud_dog

I don't wish to be pedantic but the OP was.....

googler wrote:

Haven't given my pension much thought up till this arrived, and I've heard tell that financial advisors can charge something of the order of 2% of the pension pot value for advising on alternatives, and/or carrying out process of switching to alternative investments; is this accurate/current?

Which I think provides a clear indication of what the poster is considering.

Your response and link address the posters follow up/ revised question of:

googler wrote:

Does anyone have a link to some kind of list or high-level guide to what the options could be?

Which is fine but the options for the OP are mute without knowing the facts at hand regarding the existing scheme and understanding the implications of the various options. The OP has stated they are in the dark about pensions

Without the facts there is no context for utilising any information (Your link included).

TBC15

googler wrote: »

I don't have an opinion on whether or not this would be better. As I said, I've not given my pension much thought until the statement arrived.

I'm looking for viewpoints on doing it, perhaps experiences from folks who have done this, or those who haven't (and the why in both cases)

Clearly, you're in the 'haven't' camp

I’m in the have camp, and have been for a year and a half. I’m quite happy with the switch, but it was all based on my CETV value and my circumstances/requirements.

Bimbly

In general, you are better off leaving you final salary pension as it is. It will pay out a guaranteed amount every year from your scheme retirement date (typically age 60 or 65 or state retirement age). This will increase with inflation every year (in almost all schemes) and will usually have a spouse benefit which usually pays out 50% (often) of the pension every year to your other half if you die before them.

This gives you a nice reliable "salary" for being retired. You don't need to worry about the stock market or any of that jazz. For most people, in general, they are better off sticking with this.

Now, look at your statement. It will say how much pension you have built up in your scheme at current inflation levels, say £X,000 per year. If you are still paying into it (working at the company) then it will forecast how much you will have built up at scheme retirement age, say, £Y,000.

Would £Y,000 be enough for you to retire on? (or £X,000 if you've stopped working there). If so, then in general you can leave it be.

However, if it's not enough, you could consider paying extra into a different pension which gives you a pot of money to take at retirement, probably over the course of a few or many years. You can look at opening your own SIPP (self invested personal pension) or maybe your scheme has a good deal for an additional pension.

You may also want to consider paying in extra if you want to retire earlier than your scheme retirement age.

In general, most people would be better off leaving their final salary pension where it is. In some cases, transferring out may be appropriate, but I'm not going to go into those here. If you have a search in the forum you will lots of discussions from people asking about transferring out and you can get an idea from that. As said above, not all schemes will allow you to do this anyway.

Of course, we don't know anything about you or your pension so not easy to say much more. But I hope that overview helps.

googler

cloud_dog wrote: »

I know you said you are in the dark about pensions but....You are completely missing the point.

By asking questions? OK ...

Without the CETV there is absolutely no way of understanding what may or may not be an appropriate option.

I didn't think I was asking for appropriate options to my situation in particular, merely a high-level overview of what options could be available to me.

Linton

A very high level overview.....

The core option is to transfer the CETV value to another pension scheme. From this other pension scheme you could:
1) choose to buy an annuity
2) manage the money in an investment portfolio with or without an advisor and drawdown the money as and when you need it
3) Withdraw the whole lot as cash in one go and potentially pay a very high rate of tax.
4) Keep it untouched and it could all be inherited by a nominated family member when you die, free of IHT.

Or some mixture of the above



Note that you cannot buy an annuity or withdraw any money until you are 55.


A DB pension guarantees your income in retirement for the whole of your life. Your income would also be guaranteed in an annuity, however it would probably be lower than from the DB pension unless you had life threatening ill health. If you hold the money in an investment portfolio nothing is guaranteed - if you run out of money before you die that's your bad luck or bad management.

cloud_dog

googler wrote: »

I didn't think I was asking for appropriate options to my situation in particular, merely a high-level overview of what options could be available to me.

You can ask what you like, it is an open forum but, that certainly wasn't my understanding based on what and how you posted your question:

googler wrote: »

Haven't given my pension much thought up till this arrived, and I've heard tell that financial advisors can charge something of the order of 2% of the pension pot value for advising on alternatives, and/or carrying out process of switching to alternative investments; is this accurate/current?

What have other folks done? Any recommendations?

It certainly gives the impression of a probable course of action present in your mind.

I offered a course of action so that you could have the appropriate information in order to make an informed choice. Feel free to ignore it. I have gained lots from listening to opinions on this forum, and lost nothing.

Mat_P

at what point does the CETV multiple start to become worth serious consideration ?
30x
40x
50x?

Aegis

Mat_P wrote: »

at what point does the CETV multiple start to become worth serious consideration ?
30x
40x
50x?

It depends on so many factors. Risk tolerance, other wealth, time to retirement, health, family circumstances, etc.


In general, 30 or more near to retirement is pretty decent, but that doesn't mean transferring is automatically a good idea.